Sea Love
Initial Investment Range
$109,000 to $526,250
Franchise Fee
$59,500 to $69,500
Sea Love, a boutique shop offering scent blending experiences and the retail sale of candles, home fragrances, and related products and services.
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Sea Love April 19, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: July 16, 2025
DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor has a history of net losses and a significant negative net worth (deficit) of ($183,663) as of year-end 2024. The FDD includes a "Special Risk" warning that the company's financial condition calls into question its ability to provide support. This financial instability could impact the franchisor's capacity to fulfill its obligations, invest in the brand, and remain solvent, posing a significant risk to your investment.
Potential Mitigations
- An experienced franchise accountant must thoroughly review the franchisor's audited financial statements, including all footnotes and trends.
- Inquiring about the franchisor’s plans for achieving profitability and its current capitalization is a critical step for your business advisor.
- Your attorney should assess the implications of the franchisor's financial state on its ability to perform its contractual obligations.
High Franchisee Turnover
Low Risk
Explanation
This risk was not identified in the FDD package. Item 20 data shows no franchisee terminations, non-renewals, or other cessations of business for the last three years. A high turnover rate can be a major red flag, often indicating systemic problems such as low franchisee profitability, inadequate support, or an unviable business model. Careful review of Item 20 is always crucial for any franchise opportunity.
Potential Mitigations
- Speaking with a range of current franchisees about their satisfaction and profitability is a key due diligence step recommended by business advisors.
- Your accountant can help you analyze the franchisee turnover data in any FDD to calculate the actual churn rate.
- An attorney can help you understand the definitions a franchisor uses for categories like "transfer" vs. "ceased operations."
Rapid System Growth
High Risk
Explanation
The system has grown rapidly from zero to 11 franchised outlets in two years, with more projected. While growth can be positive, this pace, combined with the franchisor's disclosed financial instability and net losses, creates a risk that its support infrastructure may not keep up. This could potentially lead to inadequate training, site selection assistance, and ongoing operational support for you and other new franchisees as the system expands.
Potential Mitigations
- Your business advisor should help you question the franchisor directly about its specific plans and budget for scaling its support staff and systems.
- Speaking with the most recently opened franchisees about the quality and timeliness of the support they received is essential.
- An accountant's review of the franchisor's financials can help assess if they have allocated sufficient resources to support this growth.
New/Unproven Franchise System
High Risk
Explanation
The franchisor, Sea Love Franchise, LLC (Sea Love LLC), was established in 2022 and has a very limited operating history. The FDD itself discloses this as a "Special Risk," stating the franchise is likely a riskier investment than one with a longer history. This newness means the business model, brand recognition, and support systems are relatively unproven, which could increase your overall business risk compared to a more mature franchise system.
Potential Mitigations
- Engaging a business advisor to conduct deep due diligence on the founders' specific experience in both the retail industry and franchising is critical.
- Your accountant should perform a thorough analysis of the franchisor's capitalization and business plan to assess its long-term viability.
- An attorney may be able to negotiate more franchisee-favorable terms to help offset the higher risks associated with an unproven system.
Possible Fad Business
Medium Risk
Explanation
The business concept, centered on a "scent blending experience," is part of the "experiential retail" trend. While underlying products like candles are established, the long-term consumer demand for this specific experience-based model may be uncertain. You should consider the risk that the concept could be a fad, potentially impacting the business's sustainability after the initial trend subsides, while your long-term contractual obligations would remain.
Potential Mitigations
- A business advisor can help you independently research the long-term market trends for "experiential retail" and boutique fragrance concepts.
- Evaluate the business's ability to adapt and evolve if the primary "experience" component becomes less popular.
- Assessing the company's plans for product and service innovation beyond the current model is a prudent step.
Inexperienced Management
High Risk
Explanation
The executive team's experience in operating a multi-unit franchise system is very recent, dating from 2022. While they have operated a similar company-owned store since 2018, managing a national franchise network requires a different skill set. This limited franchising-specific experience could present risks related to the adequacy of support, strategic growth management, and the overall robustness of the franchise systems as the brand expands.
Potential Mitigations
- It is important to question the franchisor about what experienced franchise consultants or advisors they have engaged to guide them.
- Speaking extensively with the initial franchisees about the quality of support and system maturity is a crucial due diligence step.
- A business advisor can help you assess whether the management team's skills are well-suited for scaling a national franchise system.
Private Equity Ownership
Low Risk
Explanation
The FDD does not indicate that the franchisor is owned by a private equity firm. Private equity ownership can sometimes introduce risks, such as a focus on short-term returns over the long-term health of the brand, which might lead to increased fees or reduced support. It is always beneficial to understand the franchisor's ownership structure and long-term goals.
Potential Mitigations
- Understanding the long-term vision of any franchisor's leadership team is a wise step, which a business advisor can help you assess.
- Reviewing the "Assignment by Franchisor" clause in any franchise agreement with your attorney is crucial to understand who could own the brand in the future.
- Your attorney can help verify the ownership structure detailed in Item 1 of the FDD.
Non-Disclosure of Parent Company
Low Risk
Explanation
The FDD explicitly states that the franchisor does not have a parent company. In some franchise systems, a thinly capitalized subsidiary offers franchises while a wealthier parent company remains undisclosed. This can mask financial weakness. In this case, the franchisor entity appears to be the primary operating entity for the franchise system, though its financial condition is weak.
Potential Mitigations
- Your attorney can help verify the corporate structure described in Item 1 to ensure there are no undisclosed controlling entities.
- An accountant's review of the provided financial statements is key to assessing the stand-alone financial health of the franchisor entity.
- Inquiring about the role and financial health of any affiliated companies mentioned in Item 1 is a good practice.
Predecessor History Issues
Low Risk
Explanation
The FDD states that the franchisor does not have any predecessors, meaning it did not acquire the system from a prior entity. This risk is not present. When predecessors exist, it is important to scrutinize their history for issues like bankruptcy or high franchisee turnover, as these could reflect underlying problems with the business model that may have been passed on to the current franchisor.
Potential Mitigations
- Your attorney should always carefully review Item 1 of any FDD for information on predecessors.
- If a system was acquired from a predecessor, a business advisor might recommend independent research into that entity's history.
- Talking to long-term franchisees who operated under a predecessor can provide invaluable historical context.
Pattern of Litigation
Low Risk
Explanation
This risk was not identified, as Item 3 of the FDD discloses no history of litigation with franchisees. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a significant warning sign about a franchisor’s practices and the health of the franchise relationship. The absence of such litigation is a positive indicator for this new system.
Potential Mitigations
- An attorney can conduct independent searches for litigation involving the franchisor or its principals that may not have met the disclosure threshold.
- It is always a good practice to ask current and former franchisees about any disputes they may have had, even if they didn't result in litigation.
- Understanding the dispute resolution clauses in the Franchise Agreement with your attorney is important for any potential future conflicts.
Disclosure & Representation Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
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Financial & Fee Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
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Legal & Contract Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
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Territory & Competition Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Regulatory & Compliance Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Franchisor Support Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Operational Control Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Term & Exit Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
Miscellaneous Risks
Example Risk: Franchisee Financial Obligations
Blue Risk
Explanation
This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.
Potential Mitigations
- Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
- Conduct regular risk assessments
- Implement monitoring and reporting systems
Unlock Full Risk Analysis
Purchase the complete risk review to see all 102 risks across all 10 categories.
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